What AT&T’s Satellite Deal Might Mean

In the telecommunications industry, the big only seem to get bigger. Three months after the nation’s top two cable companies, Comcast and Time Warner Cable, announced they were merging, the nation’s largest telephone company, AT&T, said on Sunday it would buy the biggest satellite-TV business, DirecTV, for $48.5 billion.

Megamergers always raise lots of questions. And that’s particularly true of the telecommunications industry with its high barriers to entry and limited competition. AT&T says that its purchase of DirecTV will be good for consumers, and it is promising several goodies like a pledge to bring high-speed Internet service to rural America to get regulators to look favorably upon the deal. But the company has not yet made a convincing case. As with the Comcast-Time Warner Cable deal, regulators should carefully analyze this acquisition for its impact on the market for paid TV service.

AT&T executives say that their acquisition is not driven by Comcast’s purchase of Time Warner Cable, but that’s hard to believe. AT&T is no longer just a phone company. It has long been in the wireless business, and, in recent years, it has established a big presence in the TV business, which it hopes to expand substantially with this purchase. Buying DirecTV with its more than 20 million American subscribers (it has 18 million customers in Latin America, too), would give AT&T the national reach in paid television that it needs to compete with a bulked-up Comcast for subscribers and for the opportunity to buy the rights to TV shows, sports and movies.

AT&T wants to sell to its customers multiple services like wireless, broadband and satellite TV, which it already does in parts of the country where it has a wired network, but not where it has no such network. DirecTV has the advantage of reaching all parts of the country; it has deals with other telecom companies to provide high-speed Internet and telephone service to its customers. Companies now feel that they have to offer combination packages because customers are less likely to switch providers if they have signed up for several services.

The biggest potential losers of this deal are consumers in 22 states, including California, Texas and Illinois, where AT&T already provides its own TV service through its U-Verse network. A merger with DirecTV would be bad for these customers because it would reduce choices in markets where AT&T currently competes with cable companies as well as the two national satellite-TV firms, DirecTV and Dish Network. At the end of March, AT&T had 5.7 million TV subscribers; by comparison, Comcast had 22.6 million video customers and Verizon had 5.3 million TV customers. (AT&T is in the process of selling its wireline network in Connecticut to Frontier Communications.)

Elsewhere in the country, where AT&T does not have customers, its acquisition of DirecTV might allow it to compete more aggressively with Comcast and other cable companies. But given the rich price AT&T is paying to get into the satellite business, there might be limits to how much money the company is willing to spend on discounts to get customers to switch to DirecTV.

AT&T has said it is willing to commit to offering satellite-TV plans, which are not bundled with its other services, at prices that are the same for all customers regardless of where they live for at least three years. That is nice, but it is a limited and temporary promise. And so is the company’s pledge that it will not block or interfere with the delivery of Internet content on its network for three years. The Federal Communications Commission had issued such Internet rules in 2010, but a federal court struck them down in January.

This much is clear about AT&T’s move to buy DirecTV, along with the Comcast-Time Warner Cable deal: These mergers will encourage other telecom companies like Dish Network, Verizon, Charter, Sprint and T-Mobile to contemplate deals of their own. Officials at the F.C.C. and the Justice Department, who have to review mergers for antitrust concerns, need to make sure consumers are not left worse off by these deals.

A version of this article appears in print on , on Page A22 of the New York edition with the headline: What AT&T’s Satellite Deal Might Mean. Order Reprints | Today’s Paper | Subscribe